Tripadvisor Takes Off While Expedia Trails

During Dec’11, Expedia (NASDAQ: EXPE) announced the completion of the spin-off of TripAdvisor (NASDAQ: TRIP). TripAdvisor, the online travel portal, enables users to plan a trip, while Expedia is into the business of online travel bookings with business agreements over 145,000 hotels and 300 airlines.

The deeper point, of course, is the comparison between TripAdvisor and Expedia’s stock price performance right from the day it got spun-off i.e. Dec 7, 2011. The interesting part is that TripAdvisor had its share of glory twice as many times as compared to Expedia with a growth of 157%. Today, the market cap of Expedia is at least 35% smaller to that of Trip Advisor. The main reason of TripAdvisor’s success is that, apart from showing travel reviews, the company also started showing “more hotel” options side-by-side. Although we love the company for its yesteryear glories, the future looks competitive.

Priceline earnings Q3 2015 will be announced on November 9, before market open. As powerful as Facebook, Amazon.Com, Netflix and Google (now Alphabet) have been, Priceline has been just as powerful in online travel. Priceline beats earnings estimates two-thirds of the time, and should easily top $24.21/share in earnings. A new alliance with TripAdvisor provides a future growth catalyst.

A potential change in the "Rate Parity" clause could hurt Priceline's growth in the near term, as competition and recession pose a twin threat. Priceline's fundamentals are strong for now, but here's a list of factors that could hurt Priceline's growth.

IAC/InterActiveCorp to spin-off its match division, which consists mainly of dating services. Spin-offs are part of IAC’s business model, and previous examples showed very prominent post-spin-off performances for the standalone stock. One would need to wait for the official documents to be filed to quantify the opportunity in this spin-off.

Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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